Feb. 7 (Bloomberg) -- U.S. stocks gained, snapping four weeks of declines, on speculation the deteriorating economy would force Congress to reach a compromise on President Barack Obama’s economic stimulus package.
Intel Corp. and Microsoft Corp. climbed more than 14 percent as the Senate debated the president’s plan to revive job growth and consumer spending. MasterCard Inc. gained 20 percent and drugmaker Merck & Co. climbed 7.8 percent after beating earnings estimates. Stocks also rallied in anticipation of Treasury Secretary Timothy Geithner’s Feb. 9 announcement of a bailout plan for the banking industry.
“The financial rescue is key, because it’s impossible to have a normally functioning economy without a functioning financial system,” said Bill Stone, who helps oversee about $56 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “A lot of what was holding the market back was the performance of the financials. If you get them out of the way, you could see a decent-sized rally.”
The Standard & Poor’s 500 Index rose 5.2 percent to 868.60 this week, reducing its 2009 decline to 3.8 percent. The Dow Jones Industrial Average added 279.73 points, or 3.5 percent, to 8,280.59. Stocks rallied even after the unemployment rate climbed to 7.6 percent, the highest level since 1992.
The S&P 500 has climbed 15 percent from the 11-year low it reached Nov. 20. The benchmark dropped 38 percent last year, its worst performance since the Great Depression. The S&P 500, Dow and MSCI World Index posted their steepest January losses as companies reported disappointing earnings and the U.S. economy shrank at the fastest pace in 26 years.
Highest Since 1974
Payrolls tumbled in January, with millions more Americans likely to lose their jobs before stimulus and emergency-lending programs temper the economy’s slide. Payrolls fell by 598,000, the biggest monthly decline since December 1974. Losses spanned almost all industries, from construction and manufacturing to retailing, trucking, media and finance.
The U.S. Senate is slated to vote early next week on an economic stimulus package totaling at least $780 billion after lawmakers reached a compromise over the size of the plan late yesterday, after the stock market closed. The House passed its own version, worth $819 billion, last week.
Geithner will announce the Treasury’s plan for supporting an “effective and lasting economic recovery.” Officials plan a combination of approaches for their overhaul of the $700 billion Troubled Asset Relief Program.
Intel, Technology Gain
Along with further injections of taxpayer funds into financial firms, the strategy is likely to include guarantees for illiquid assets on banks’ balance sheets, people familiar with the matter have said.
Intel, the world’s largest computer-chip maker, climbed 14 percent to $14.73. Microsoft, the biggest software maker, climbed 15 percent to $19.66.
Technology stocks climbed 9.7 percent, the most among 10 industries in the S&P 500. Akamai Technologies Inc. gained 29 percent to $17.41 after the largest supplier of software and services that speed up the delivery of Web sites posted better- than-estimated profit. Cisco Systems Inc., the world’s biggest maker of computer-networking equipment, increased 14 percent to $17.04 even after saying sales are likely to fall 15 percent to 20 percent in the current quarter.
MasterCard, the world’s second-largest credit-card network, gained 20 percent to $162.50. Chief Executive Officer Robert Selander cut expenses to reach profit targets jeopardized by the U.S. economic slowdown.
Job Cuts Boost Profit
Merck, the third-largest U.S. drugmaker, climbed 7.8 percent to $30.77 after savings from job cuts boosted profit. Schering- Plough Corp. gained 12 percent to $19.75. The maker of the Vytorin and Zetia drugs, for which it shares revenue with Merck, said earnings were helped by cost reductions and added sales from an acquisition.
Financial stocks in the S&P 500 fell 3.3 percent in the first three days of the week on concern about the health of Bank of America Corp., which tumbled 29 percent through Feb. 4. The industry surged on Feb. 5 and 6, giving the group a 6 percent gain for the week. Bank of America finished with a 6.8 percent retreat.
Bank of America Chief Executive Officer Kenneth Lewis said the economy is still deteriorating and that conditions are likely to improve later this year.
“Things are worsening as we speak,” Lewis said in an interview on CNBC yesterday. “We think they will stabilize sometime in the second half and we will see growth in 2010.”
Goldman Sachs Climbs
Goldman Sachs Group Inc., the biggest U.S. securities firm until becoming a bank-holding company in September, climbed 20 percent to $96.57. Morgan Stanley rose 13 percent to $22.87. Citigroup Inc. increased 10 percent to $3.91.
State Street Corp. gained 31 percent to $30.49 after the world’s largest money manager for institutions all but eliminated its dividend and cut 2008 bonuses to increase capital without diluting the ownership of existing shareholders.
Wal-Mart Stores Inc., Target Corp., Macy’s Inc. and Limited Brands Inc. each climbed at least 5 percent after reporting January sales that exceeded estimates as retailers offered discounts to lure U.S. consumers during the longest recession in a quarter century.
Humana Inc. surged 17 percent to $44.55. The second-biggest provider of U.S.-funded health insurance reported fourth-quarter earnings that beat analysts’ estimates and said higher prices for elderly customers will help the company meet its 2009 profit forecast.
Narrowest Loss
D.R. Horton Inc. gained the most in the S&P 500, surging 53 percent to $9.14, after reporting its narrowest loss in five quarters. Homebuilders in the index rose 32 percent after pending home sales increased for the first time since August.
General Electric Co. fell 8.5 percent to $11.10 and reached the lowest price since 1995 after Chief Executive Officer Jeffrey Immelt said he’s prepared to run the company with a double-A credit rating should it lose its triple-A rating.
Kraft Foods Inc., the world’s second-largest foodmaker, lost 6.1 percent to $26.34 after posting fourth-quarter earnings and sales below analysts’ estimates. The maker of Nabisco cookies, Oscar Mayer lunchmeats and Maxwell House coffee also forecast 2009 earnings that trailed predictions in a Bloomberg survey.
Walt Disney Co., the second-largest U.S. media company, fell 6 percent to $19.45 after first-quarter sales and profit missed analysts’ estimates because of flagging ad sales and consumer spending. Disney was also hurt by a Commerce Department report that showed consumer spending decreased a greater-than-estimated 1 percent in December.
Worst in 26 Years
Earnings at the 307 companies in the S&P 500 that have reported fourth-quarter results fell 37 percent on average as firms from Microsoft Corp. to Procter & Gamble Co. disappointed investors and the economy shrank at the fastest pace in 26 years. The period is projected to be the sixth straight quarter of decreasing profits, the longest streak on record.
“Most of us are looking beyond the current earnings,” said Bruce McCain, chief investment strategist at Cleveland-based Key Private Bank, which manages about $22 billion. “These are just not going to look good. It’s more a question of what are the prospects going forward.”
Saturday, February 7, 2009
Boeing, Hartford, Motorola, Smithfield: U.S. Equity Preview
Feb. 7 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading on Feb. 9. Stock symbols are in parentheses.
Amgen Inc. (AMGN:US): The world’s largest biotechnology company said it gained European approval to sell its new drug, Nplate, for a chronic bleeding disorder.
Boeing Co. (BA:US): The world’s No. 2 commercial-plane maker won a contract valued at as much as $2.95 billion to build 15 C-17 transport aircraft, the Defense Department said on its Web site.
Hartford Financial Services Group Inc. (HIG:US): The insurer that lost $2.75 billion last year may be allowed by its state regulator to reduce reserves in an effort to bolster the company’s finances, according to a person familiar with the matter.
Motorola Inc. (MOT:US): The second-biggest U.S. seller of mobile phones said in a regulatory fling that its co-chief executive officers spent $2.75 million buying 725,000 shares, their first purchases since the price fell 72 percent last year.
Smithfield Foods Inc. (SFD:US): The world’s biggest pork processor said it agreed to pay higher interest rates and pledged a processing plant as collateral to amend its $1.3 billion revolving credit facility.
Amgen Inc. (AMGN:US): The world’s largest biotechnology company said it gained European approval to sell its new drug, Nplate, for a chronic bleeding disorder.
Boeing Co. (BA:US): The world’s No. 2 commercial-plane maker won a contract valued at as much as $2.95 billion to build 15 C-17 transport aircraft, the Defense Department said on its Web site.
Hartford Financial Services Group Inc. (HIG:US): The insurer that lost $2.75 billion last year may be allowed by its state regulator to reduce reserves in an effort to bolster the company’s finances, according to a person familiar with the matter.
Motorola Inc. (MOT:US): The second-biggest U.S. seller of mobile phones said in a regulatory fling that its co-chief executive officers spent $2.75 million buying 725,000 shares, their first purchases since the price fell 72 percent last year.
Smithfield Foods Inc. (SFD:US): The world’s biggest pork processor said it agreed to pay higher interest rates and pledged a processing plant as collateral to amend its $1.3 billion revolving credit facility.
China Institute Proposes Weaker Yuan to Boost Growth
Feb. 7 (Bloomberg) -- China should “actively guide” the yuan’s exchange rate to about 6.93 against the dollar to help maintain economic growth and bolster employment, according to a report by the Ministry of Finance’s research institute.
The nation should also increase purchases of commodities from abroad and build up energy reserves to offset pressures on the Chinese currency to rise, said the report, published today in the Shanghai Securities News.
Rising labor costs and a stronger yuan have slowed overseas shipments of Chinese-made textiles, toys and machinery as the worldwide recession saps demand. The People’s Bank of China wants to avoid big movements in the yuan and the global crisis will be the key determinant of currency policy, Governor Zhou Xiaochuan said this week in Beijing.
“Depreciating the currency would be little help,” Li Wei, a Shanghai-based economist at Standard Chartered Bank Plc, said today in an interview. “The slowdown in exports is mainly due to lack of demand.”
The world’s third-largest economy will continue to slow in the first half, the ministry report said. Growth will “stabilize” in the second half thanks to the government’s stimulus measures. China in November announced a 4 trillion yuan ($585 billion) spending plan to boost growth.
Rates Cut
The central bank should continue to cut lending rates “by relatively large margins” in the first half to boost investment and prop up the real estate and stock markets, today’s report said. China has cut interest rates five times since September.
Deposit rates should also be lowered further to benchmarks in U.S. and other markets to help maintain a “normal” exchange rate level, the report said. China’s one-year deposit rate stands at 2.25 percent, with the lending rate at 5.31 percent.
The Chinese economy expanded by 6.8 percent in the fourth quarter, the slowest pace in seven years. The yuan traded at 6.8344 a dollar at the 5:30 p.m. close in Shanghai yesterday, from 6.8367 per dollar the day before, according to the China Foreign Exchange Trade System.
The yuan’s level of about 6.83 against the dollar is “slightly lower” than the average costs 65 major textile companies in east China’s Jiangsu Province pay for each dollar they earn from exports, today’s report said. Growth in textile and garment shipments slipped by 10.7 percentage points in 2008.
“Weakening the yuan to boost exports would give ammunition to people accusing China of protectionism,” Li said. “I don’t think this report can represent finance ministry policy.”
The report predicted China’s fiscal revenue to grow by 10 percent this year to 6.7 trillion yuan. Expenditures may rise by 14 percent to 7.2 trillion yuan.
The report, by Yan Kun and Zhang Peng at the research institute, was carried by Xinhua News Agency today.
The nation should also increase purchases of commodities from abroad and build up energy reserves to offset pressures on the Chinese currency to rise, said the report, published today in the Shanghai Securities News.
Rising labor costs and a stronger yuan have slowed overseas shipments of Chinese-made textiles, toys and machinery as the worldwide recession saps demand. The People’s Bank of China wants to avoid big movements in the yuan and the global crisis will be the key determinant of currency policy, Governor Zhou Xiaochuan said this week in Beijing.
“Depreciating the currency would be little help,” Li Wei, a Shanghai-based economist at Standard Chartered Bank Plc, said today in an interview. “The slowdown in exports is mainly due to lack of demand.”
The world’s third-largest economy will continue to slow in the first half, the ministry report said. Growth will “stabilize” in the second half thanks to the government’s stimulus measures. China in November announced a 4 trillion yuan ($585 billion) spending plan to boost growth.
Rates Cut
The central bank should continue to cut lending rates “by relatively large margins” in the first half to boost investment and prop up the real estate and stock markets, today’s report said. China has cut interest rates five times since September.
Deposit rates should also be lowered further to benchmarks in U.S. and other markets to help maintain a “normal” exchange rate level, the report said. China’s one-year deposit rate stands at 2.25 percent, with the lending rate at 5.31 percent.
The Chinese economy expanded by 6.8 percent in the fourth quarter, the slowest pace in seven years. The yuan traded at 6.8344 a dollar at the 5:30 p.m. close in Shanghai yesterday, from 6.8367 per dollar the day before, according to the China Foreign Exchange Trade System.
The yuan’s level of about 6.83 against the dollar is “slightly lower” than the average costs 65 major textile companies in east China’s Jiangsu Province pay for each dollar they earn from exports, today’s report said. Growth in textile and garment shipments slipped by 10.7 percentage points in 2008.
“Weakening the yuan to boost exports would give ammunition to people accusing China of protectionism,” Li said. “I don’t think this report can represent finance ministry policy.”
The report predicted China’s fiscal revenue to grow by 10 percent this year to 6.7 trillion yuan. Expenditures may rise by 14 percent to 7.2 trillion yuan.
The report, by Yan Kun and Zhang Peng at the research institute, was carried by Xinhua News Agency today.
MF Says Advanced Economies Already in Depression
Feb. 7 (Bloomberg) -- Advanced economies are already in a "depression" and the financial crisis may deepen unless the banking system is fixed, International Monetary Fund Managing Director Dominique Strauss-Kahn said.
“The worst cannot be ruled out,” Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia. “There’s a lot of downside risk.”
Ten days ago, the IMF cut its world-growth estimate for this year to 0.5 percent, the weakest pace since World War II. Stimulus packages alone won’t succeed in dragging the global economy out of recession unless confidence is restored in the banking system, Strauss-Kahn said today.
“All this will work if, and only if, the different countries are likely to do what they have to do in terms of restructuring the banking sector,” he said. “And today it’s not done.”
The U.S. economy has lost 3.57 million jobs since a recession started in December 2007, its biggest employment slump of any economic contraction in the postwar period as companies from Macy’s Inc. to Caterpillar Inc. cut costs. The U.K. economy will shrink this year by the most since 1946, the IMF forecasts.
“There is hope that the fiscal and monetary stimulus measures being implemented around the world can help turn things around,” said David Cohen, Singapore-based director of Asian economic forecasting at Action Economics. “But there is still the risk it can be short-circuited by further financial turmoil.”
$780 Billion Package
The U.S. Senate is due to vote early next week on an economic stimulus package totaling at least $780 billion that President Barack Obama said is needed to prevent the economy from sinking into a deeper recession. Asian nations from China to Singapore and India have pledged more than $685 billion on their own spending programs.
The Obama administration is considering subjecting banks to a new test to determine whether they require fresh capital injections as part of a rescue plan to be unveiled by Treasury Secretary Timothy Geithner next week, people familiar with the matter said.
Governments should be ready for “full-fledged” intervention, acting quickly to sell or wind-up insolvent lenders, Strauss-Kahn said. While the European Central Bank, which left interest rates unchanged this week, may have more room to cut borrowing costs, such a policy may not be as important as restructuring the region’s banks, he said.
Borrowing Costs
“We’re probably not very far from the point where the question of interest rates is not the most important question,” Strauss-Kahn said. “Providing direct liquidity to the market, restructuring the banking sector, may have more influence on demand than interest rates.”
In Asia, “there’s still room for bigger stimulus packages,” the IMF official said. Malaysia, for example, may introduce a second stimulus package larger than November’s 7 billion-ringgit ($1.9 billion) plan, he said.
Developing Asia will probably expand 5.5 percent this year, the slowest pace since 1998, the IMF said in last month’s update of its World Economic Outlook report. The region may expand 6.9 percent next year, the fund forecasts.
Asian nations will need a recovery in the global economy before the region can exit a slowdown, the IMF said this month. Strauss-Kahn said today the fund’s forecast for a recovery to start in 2010 is “very uncertain.”
Demand for Loans
Demand for IMF loans is rising in nations suffering from weaker export sales, banking industry turmoil and deteriorating investor confidence. The organization has so far agreed to lend $47.9 billion to countries affected by the crisis, including Belarus, Hungary, Iceland, Latvia, Pakistan, Ukraine and Serbia.
Strauss-Kahn said he agreed with Poland that the eastern European nation isn’t in need of assistance from the fund now, but may require financial aid in the future.
The fund may collaborate with some countries to restore confidence, without necessarily providing immediate loans, the official said.
“Some need for precautionary arrangements may appear,” he said, without naming specific countries.
Critics of the fund say it’s failed to keep up with the pace of change as the worldwide recession deepens.
The IMF and similar institutions are “incapable” of coping with the global financial crisis, because their resources can’t keep up with demand, former World Bank President Paul Wolfowitz said on Feb. 4.
Russian Prime Minister Vladimir Putin has criticized the World Bank, IMF and World Trade Organization as anachronistic organizations that give no voice to emerging economies.
The IMF and the World Bank were set up at the 1944 Bretton Woods conference. The IMF was designed to prevent crises in the international monetary system and to provide financing to distressed countries.
“The worst cannot be ruled out,” Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia. “There’s a lot of downside risk.”
Ten days ago, the IMF cut its world-growth estimate for this year to 0.5 percent, the weakest pace since World War II. Stimulus packages alone won’t succeed in dragging the global economy out of recession unless confidence is restored in the banking system, Strauss-Kahn said today.
“All this will work if, and only if, the different countries are likely to do what they have to do in terms of restructuring the banking sector,” he said. “And today it’s not done.”
The U.S. economy has lost 3.57 million jobs since a recession started in December 2007, its biggest employment slump of any economic contraction in the postwar period as companies from Macy’s Inc. to Caterpillar Inc. cut costs. The U.K. economy will shrink this year by the most since 1946, the IMF forecasts.
“There is hope that the fiscal and monetary stimulus measures being implemented around the world can help turn things around,” said David Cohen, Singapore-based director of Asian economic forecasting at Action Economics. “But there is still the risk it can be short-circuited by further financial turmoil.”
$780 Billion Package
The U.S. Senate is due to vote early next week on an economic stimulus package totaling at least $780 billion that President Barack Obama said is needed to prevent the economy from sinking into a deeper recession. Asian nations from China to Singapore and India have pledged more than $685 billion on their own spending programs.
The Obama administration is considering subjecting banks to a new test to determine whether they require fresh capital injections as part of a rescue plan to be unveiled by Treasury Secretary Timothy Geithner next week, people familiar with the matter said.
Governments should be ready for “full-fledged” intervention, acting quickly to sell or wind-up insolvent lenders, Strauss-Kahn said. While the European Central Bank, which left interest rates unchanged this week, may have more room to cut borrowing costs, such a policy may not be as important as restructuring the region’s banks, he said.
Borrowing Costs
“We’re probably not very far from the point where the question of interest rates is not the most important question,” Strauss-Kahn said. “Providing direct liquidity to the market, restructuring the banking sector, may have more influence on demand than interest rates.”
In Asia, “there’s still room for bigger stimulus packages,” the IMF official said. Malaysia, for example, may introduce a second stimulus package larger than November’s 7 billion-ringgit ($1.9 billion) plan, he said.
Developing Asia will probably expand 5.5 percent this year, the slowest pace since 1998, the IMF said in last month’s update of its World Economic Outlook report. The region may expand 6.9 percent next year, the fund forecasts.
Asian nations will need a recovery in the global economy before the region can exit a slowdown, the IMF said this month. Strauss-Kahn said today the fund’s forecast for a recovery to start in 2010 is “very uncertain.”
Demand for Loans
Demand for IMF loans is rising in nations suffering from weaker export sales, banking industry turmoil and deteriorating investor confidence. The organization has so far agreed to lend $47.9 billion to countries affected by the crisis, including Belarus, Hungary, Iceland, Latvia, Pakistan, Ukraine and Serbia.
Strauss-Kahn said he agreed with Poland that the eastern European nation isn’t in need of assistance from the fund now, but may require financial aid in the future.
The fund may collaborate with some countries to restore confidence, without necessarily providing immediate loans, the official said.
“Some need for precautionary arrangements may appear,” he said, without naming specific countries.
Critics of the fund say it’s failed to keep up with the pace of change as the worldwide recession deepens.
The IMF and similar institutions are “incapable” of coping with the global financial crisis, because their resources can’t keep up with demand, former World Bank President Paul Wolfowitz said on Feb. 4.
Russian Prime Minister Vladimir Putin has criticized the World Bank, IMF and World Trade Organization as anachronistic organizations that give no voice to emerging economies.
The IMF and the World Bank were set up at the 1944 Bretton Woods conference. The IMF was designed to prevent crises in the international monetary system and to provide financing to distressed countries.
Friday, February 6, 2009
Canadian Stocks Rise, Post Only 2009 Gain Among Biggest Markets
Feb. 6 (Bloomberg) -- Canadian stocks rose, making it only equity market among the 10 biggest developed nations to post a 2009 gain, on speculation rising U.S. unemployment will spur approval of a stimulus plan that revives demand for commodities.
Potash Corp. of Saskatchewan Inc. advanced 4.4 percent as grain and oilseed prices climbed on droughts in Brazil and China, suggesting farmers may step up fertilizer purchases for the next crop season. Research In Motion Ltd. rallied 3.1 percent to a four-month high after UBS AG said its analysis found “positive momentum” for sales at the maker of the BlackBerry smartphone.
The Standard & Poor’s/TSX Composite Index rose 1.7 percent to 9,008.02. U.S. stocks climbed today on speculation that a government report showing the highest unemployment rate since 1992 will force Congress to approve President Barack Obama’s $900 billion economic stimulus package.
“It’s all about the U.S. here in Canada,” said Luc Girard, who helps oversee about $14.1 billion as director of Desjardins Securities’ portfolio advisory group in Montreal. “We knew unemployment would get worse before it gets better.”
The Senate may vote this evening on an economic stimulus package after making progress in bipartisan negotiations on cutting Obama’s $900 billion plan, according to a top Democrat. The U.S. unemployment rate rose to 7.6 percent, the Labor Department said today.
Canada, which sends more than three-quarters of its exports to the U.S., lost a record number of jobs in January, pushing the unemployment rate to a four-year high of 7.2 percent. Canadian Finance Minister Jim Flaherty last month announced C$84.9 billion in deficits over the next five years as the government tries to stimulate growth with tax cuts and spending. Today he said Canada “will do more” if necessary.
‘Clean, Green’
Potash, the largest maker of crop nutrients, jumped C$4.70 to C$110.80, the highest closing price since Oct. 14. Soybean, corn and wheat prices rose in Chicago after drought hurt the outlook for crops in Brazil, and China said its wheat harvest has been cut by a lack of rain.
Potash is also in UBS AG’s so-called “Clean, Green Obama Energy Basket” of stocks that stand to benefit from the U.S. stimulus plan, according to a note today from UBS strategists Thomas Doerflinger and David Bianco.
Metal miners gained after copper rose 8.6 percent in New York, the most in three months. China, the biggest copper user, began investing the second allocation of funds from its $585 billion stimulus plan, Xinhua News Agency said Feb. 3.
Teck Cominco Ltd., Canada’s biggest diversified mining company, advanced 5.8 percent to C$5.29. Inmet Mining Corp., another copper producer, jumped 11 percent to C$26.11.
Mobile Phones
Research In Motion climbed 3.1 percent to C$72.10, the highest price since Sept. 26. UBS analysts led by Jeffrey Fan raised their share-price estimate 36 percent to $57 (C$72.01). They kept a “neutral” rating on the stock, citing concern the weaker economy may hurt demand for mobile phones.
RIM also had its share price estimate increased 18 percent to $67 by Bank of America Corp. analyst Vivek Arya in New York, who said new handsets will help the company gain market share from competitors. Arya reiterated his “buy” recommendation.
In the S&P/TSX, three stocks rose for each one that fell and eight of 10 industry groups gained. The main benchmark for Canadian stocks rallied 3.6 percent since Jan. 30, notching its second-straight weekly gain. The S&P/TSX plunged 35 percent in 2008 for its worst annual drop since 1931.
Manulife, Suncor
Manulife Financial Corp. paced gains among banks and insurers after today’s worldwide rally in equities allayed concern about investment losses at financial institutions.
Manulife, Canada’s biggest insurance company, gained 4 percent to C$21.23. Canadian Imperial Bank of Commerce, the nation’s fifth-largest lender, climbed 3.3 percent to C$48.45.
Suncor Energy Inc., the world’s second-largest oilsands producer, advanced 3.4 percent to C$25.49.
Shoppers Drug Mart Corp. fell 2.6 percent to C$43 for its biggest drop in more than two weeks. Canada’s biggest pharmacy chain had its earnings estimates cut by David Hartley at BMO Capital Markets. The recession will hurt all retailers, the Toronto-based analyst said in a note to clients today. He cut his share-price target by 7.7 percent to C$48.
Potash Corp. of Saskatchewan Inc. advanced 4.4 percent as grain and oilseed prices climbed on droughts in Brazil and China, suggesting farmers may step up fertilizer purchases for the next crop season. Research In Motion Ltd. rallied 3.1 percent to a four-month high after UBS AG said its analysis found “positive momentum” for sales at the maker of the BlackBerry smartphone.
The Standard & Poor’s/TSX Composite Index rose 1.7 percent to 9,008.02. U.S. stocks climbed today on speculation that a government report showing the highest unemployment rate since 1992 will force Congress to approve President Barack Obama’s $900 billion economic stimulus package.
“It’s all about the U.S. here in Canada,” said Luc Girard, who helps oversee about $14.1 billion as director of Desjardins Securities’ portfolio advisory group in Montreal. “We knew unemployment would get worse before it gets better.”
The Senate may vote this evening on an economic stimulus package after making progress in bipartisan negotiations on cutting Obama’s $900 billion plan, according to a top Democrat. The U.S. unemployment rate rose to 7.6 percent, the Labor Department said today.
Canada, which sends more than three-quarters of its exports to the U.S., lost a record number of jobs in January, pushing the unemployment rate to a four-year high of 7.2 percent. Canadian Finance Minister Jim Flaherty last month announced C$84.9 billion in deficits over the next five years as the government tries to stimulate growth with tax cuts and spending. Today he said Canada “will do more” if necessary.
‘Clean, Green’
Potash, the largest maker of crop nutrients, jumped C$4.70 to C$110.80, the highest closing price since Oct. 14. Soybean, corn and wheat prices rose in Chicago after drought hurt the outlook for crops in Brazil, and China said its wheat harvest has been cut by a lack of rain.
Potash is also in UBS AG’s so-called “Clean, Green Obama Energy Basket” of stocks that stand to benefit from the U.S. stimulus plan, according to a note today from UBS strategists Thomas Doerflinger and David Bianco.
Metal miners gained after copper rose 8.6 percent in New York, the most in three months. China, the biggest copper user, began investing the second allocation of funds from its $585 billion stimulus plan, Xinhua News Agency said Feb. 3.
Teck Cominco Ltd., Canada’s biggest diversified mining company, advanced 5.8 percent to C$5.29. Inmet Mining Corp., another copper producer, jumped 11 percent to C$26.11.
Mobile Phones
Research In Motion climbed 3.1 percent to C$72.10, the highest price since Sept. 26. UBS analysts led by Jeffrey Fan raised their share-price estimate 36 percent to $57 (C$72.01). They kept a “neutral” rating on the stock, citing concern the weaker economy may hurt demand for mobile phones.
RIM also had its share price estimate increased 18 percent to $67 by Bank of America Corp. analyst Vivek Arya in New York, who said new handsets will help the company gain market share from competitors. Arya reiterated his “buy” recommendation.
In the S&P/TSX, three stocks rose for each one that fell and eight of 10 industry groups gained. The main benchmark for Canadian stocks rallied 3.6 percent since Jan. 30, notching its second-straight weekly gain. The S&P/TSX plunged 35 percent in 2008 for its worst annual drop since 1931.
Manulife, Suncor
Manulife Financial Corp. paced gains among banks and insurers after today’s worldwide rally in equities allayed concern about investment losses at financial institutions.
Manulife, Canada’s biggest insurance company, gained 4 percent to C$21.23. Canadian Imperial Bank of Commerce, the nation’s fifth-largest lender, climbed 3.3 percent to C$48.45.
Suncor Energy Inc., the world’s second-largest oilsands producer, advanced 3.4 percent to C$25.49.
Shoppers Drug Mart Corp. fell 2.6 percent to C$43 for its biggest drop in more than two weeks. Canada’s biggest pharmacy chain had its earnings estimates cut by David Hartley at BMO Capital Markets. The recession will hurt all retailers, the Toronto-based analyst said in a note to clients today. He cut his share-price target by 7.7 percent to C$48.
Asian Currencies Climb This Week on Efforts to Revive Economies
Feb. 7 (Bloomberg) -- An Asian currency gauge rose for a second week as policy makers stepped up efforts to revive economies reeling from the global recession, raising speculation overseas investors are returning to emerging markets.
Malaysia is prepared to take “radical” steps to boost the economy, the government said on Feb. 5, while Indonesia a day earlier cut interest rates for a third straight month. Taiwan will offer tax breaks and subsidized loans to lure local investors back from China, which is increasing export tax rebates for textiles. U.S. President Barack Obama urged lawmakers on Feb. 5 to pass his economic stimulus plan or face “catastrophe.”
The Philippine peso capped the biggest weekly advance in a month. India’s rupee had a second week of gains and Malaysia’s ringgit traded at a one-week high as regional stocks rallied.
“It’s a reversal of risk aversion,” said Vishnu Varathan, a regional economist at Forecast Singapore Pte. The peso “is moving in line with regional currencies on hopes Obama’s plan is making its way with less impediments.”
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.4 percent for the week to 105.10. The peso climbed 0.5 percent yesterday to 47.202 per dollar, a weekly gain of 0.4 percent. India’s rupee advanced 0.3 percent this week to 48.7250 versus the U.S. currency.
Malaysia, U.S. Stimulus
A U.S. Treasury official this week said Secretary Timothy Geithner will make a speech on Feb. 9 and Obama will hold a news conference that will address the financial recovery plan.
The MSCI Asia Pacific Index of regional shares rose 1.2 percent. The gauge has fallen 6.9 percent in 2009, extending last year’s record 43 percent tumble, as the credit crisis dragged the world’s biggest economies into recession.
Malaysia’s second stimulus plan, to be announced soon, will be much bigger than November’s 7 billion ringgit ($1.9 billion) package, state news service Bernama reported late on Feb. 5, citing Finance Minister Najib Razak.
“You’ve seen a little bit of sentiment shift in the market,” said Magnus Prim, chief Asia strategist at Skandinaviska Enskilda Banken in Singapore. “We’re still bearish on the ringgit so we think the strength we’re seeing now will prove temporary. We think there would be more negative news coming out of the economic front.”
The ringgit rose 0.3 percent to 3.6017 per dollar, gaining 0.2 percent on the week.
U.S. Jobless
The U.S. dollar fell versus the yen on concern a government report would show the jobless rate rose to a 16-year high, which it did, rising to 7.6 percent. The currency declined to 90.89 yen from 91.23 yen late in New York on Feb. 5. Against the euro, it traded at $1.2786 from $1.2790.
Taiwan, China, Malaysia and the Philippines will all issue data on exports next week, with economists surveyed by Bloomberg News forecasting contractions in each nation. The Bank of Korea also meets on interest rates.
Taiwan’s dollar declined this week on speculation falling exports and the slowing economy will deter overseas investors.
Economists are expecting overseas sales from Taiwan slid 48 percent in January, following a 42 percent decline a month earlier, according to a Bloomberg survey before the trade report on Feb. 9.
Taiwan Dollar, Exports
The central bank may seek to weaken its currency to help exports, according to AU Optronics Corp., the world’s third- biggest producer of liquid-crystal displays.
The bank “may encourage the currency to go downwards against the U.S. dollar in order to keep the competitiveness of our exports compared to Korea,” Andy Yang, a finance director who will take over as AU Optronics’s chief financial officer next month, said yesterday in an interview from Hsinchu, Taiwan.
The island’s dollar fell 0.5 percent this week to NT$33.750 from NT$33.57 on Jan. 23, when local markets closed for the week-long Lunar New Year holiday, according to Taipei Forex Inc.
Korea’s government may have to cut its economic growth forecast of 3 percent for 2009 as the economy is deteriorating faster than expected, incoming Finance Minister Yoon Jeung Hyun said yesterday.
The Korean currency rose 0.1 percent to 1,383.80 per dollar, paring this week’s loss to 0.3 percent, as global funds bought more local shares than they sold for an eighth day, the longest run of net purchases since April 2007.
Won, Yuan
“The won should be more fundamentally stable going forward,” said Stewart Newnham, a strategist with Morgan Stanley in Hong Kong. “We are still encouraged that trade is generally heading in the right direction. Financial flows are normalizing rapidly.”
Yuan forwards due in a year rose 2.4 percent this week, the most since March 1999, as China said it wants to maintain a stable currency to limit the impact of the global financial crisis. The contracts indicated China’s currency will weaken 1.1 percent to 6.9110 a dollar in a year. The Chinese yuan was little changed at 6.8360 from a week ago.
Elsewhere, the Indonesian rupiah rose 0.3 percent to 11,720 today, paring this week’s decline to 2.4 percent. The Thai baht fell 0.2 percent on the week to 35 per dollar and Vietnam’s dong was little changed at 17,485.
Malaysia is prepared to take “radical” steps to boost the economy, the government said on Feb. 5, while Indonesia a day earlier cut interest rates for a third straight month. Taiwan will offer tax breaks and subsidized loans to lure local investors back from China, which is increasing export tax rebates for textiles. U.S. President Barack Obama urged lawmakers on Feb. 5 to pass his economic stimulus plan or face “catastrophe.”
The Philippine peso capped the biggest weekly advance in a month. India’s rupee had a second week of gains and Malaysia’s ringgit traded at a one-week high as regional stocks rallied.
“It’s a reversal of risk aversion,” said Vishnu Varathan, a regional economist at Forecast Singapore Pte. The peso “is moving in line with regional currencies on hopes Obama’s plan is making its way with less impediments.”
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.4 percent for the week to 105.10. The peso climbed 0.5 percent yesterday to 47.202 per dollar, a weekly gain of 0.4 percent. India’s rupee advanced 0.3 percent this week to 48.7250 versus the U.S. currency.
Malaysia, U.S. Stimulus
A U.S. Treasury official this week said Secretary Timothy Geithner will make a speech on Feb. 9 and Obama will hold a news conference that will address the financial recovery plan.
The MSCI Asia Pacific Index of regional shares rose 1.2 percent. The gauge has fallen 6.9 percent in 2009, extending last year’s record 43 percent tumble, as the credit crisis dragged the world’s biggest economies into recession.
Malaysia’s second stimulus plan, to be announced soon, will be much bigger than November’s 7 billion ringgit ($1.9 billion) package, state news service Bernama reported late on Feb. 5, citing Finance Minister Najib Razak.
“You’ve seen a little bit of sentiment shift in the market,” said Magnus Prim, chief Asia strategist at Skandinaviska Enskilda Banken in Singapore. “We’re still bearish on the ringgit so we think the strength we’re seeing now will prove temporary. We think there would be more negative news coming out of the economic front.”
The ringgit rose 0.3 percent to 3.6017 per dollar, gaining 0.2 percent on the week.
U.S. Jobless
The U.S. dollar fell versus the yen on concern a government report would show the jobless rate rose to a 16-year high, which it did, rising to 7.6 percent. The currency declined to 90.89 yen from 91.23 yen late in New York on Feb. 5. Against the euro, it traded at $1.2786 from $1.2790.
Taiwan, China, Malaysia and the Philippines will all issue data on exports next week, with economists surveyed by Bloomberg News forecasting contractions in each nation. The Bank of Korea also meets on interest rates.
Taiwan’s dollar declined this week on speculation falling exports and the slowing economy will deter overseas investors.
Economists are expecting overseas sales from Taiwan slid 48 percent in January, following a 42 percent decline a month earlier, according to a Bloomberg survey before the trade report on Feb. 9.
Taiwan Dollar, Exports
The central bank may seek to weaken its currency to help exports, according to AU Optronics Corp., the world’s third- biggest producer of liquid-crystal displays.
The bank “may encourage the currency to go downwards against the U.S. dollar in order to keep the competitiveness of our exports compared to Korea,” Andy Yang, a finance director who will take over as AU Optronics’s chief financial officer next month, said yesterday in an interview from Hsinchu, Taiwan.
The island’s dollar fell 0.5 percent this week to NT$33.750 from NT$33.57 on Jan. 23, when local markets closed for the week-long Lunar New Year holiday, according to Taipei Forex Inc.
Korea’s government may have to cut its economic growth forecast of 3 percent for 2009 as the economy is deteriorating faster than expected, incoming Finance Minister Yoon Jeung Hyun said yesterday.
The Korean currency rose 0.1 percent to 1,383.80 per dollar, paring this week’s loss to 0.3 percent, as global funds bought more local shares than they sold for an eighth day, the longest run of net purchases since April 2007.
Won, Yuan
“The won should be more fundamentally stable going forward,” said Stewart Newnham, a strategist with Morgan Stanley in Hong Kong. “We are still encouraged that trade is generally heading in the right direction. Financial flows are normalizing rapidly.”
Yuan forwards due in a year rose 2.4 percent this week, the most since March 1999, as China said it wants to maintain a stable currency to limit the impact of the global financial crisis. The contracts indicated China’s currency will weaken 1.1 percent to 6.9110 a dollar in a year. The Chinese yuan was little changed at 6.8360 from a week ago.
Elsewhere, the Indonesian rupiah rose 0.3 percent to 11,720 today, paring this week’s decline to 2.4 percent. The Thai baht fell 0.2 percent on the week to 35 per dollar and Vietnam’s dong was little changed at 17,485.
Asian Stocks Rise Second Week Amid Government Policy Optimism
Feb. 7 (Bloomberg) -- Asian stocks rose for a second week as optimism that government measures worldwide will ease the financial crisis offset cuts in earnings forecasts at Mizuho Financial Group Inc. and Hitachi Ltd.
BHP Billiton Ltd. and Kawasaki Kisen Kaisha Ltd. led gains among mining and shipping companies after China cut some tariffs on raw material and component imports. Mitsubishi UFJ Financial Group Inc. led banks lower as rival Mizuho, Japan’s second- largest lender, cut its earnings target. Hitachi, which makes electrical equipment, slumped 6.5 percent after forecasting the biggest loss by an Asian electronics maker.
“Fiscal and monetary stimulus policies have helped improve sentiment,” said Binay Chandgothia, who oversees about $1.5 billion as chief investment officer at Principal Asset Management Co. in Hong Kong. “These measures will benefit the economy although there will be more earnings downgrades.”
The MSCI Asia Pacific Index rose 0.4 percent to 83.42 in the past five days, adding to the previous week’s 3.5 percent increase. The gauge is down 6.9 percent in 2009 amid mounting signs the global recession has hurt corporate profits.
Toyota Motor Corp., the world’s largest automaker, yesterday widened its loss prediction on slowing demand in the U.S. and in Japan. Mitsubishi UFJ cut its full-year profit forecast after the stock market closed yesterday.
The Nikkei 225 Stock Average added 1 percent last week, while Hong Kong’s Hang Seng index climbed 2.8 percent. China’s Shanghai Composite Index surged 9.6 percent.
Government Action
Stocks have fallen this year amid mounting signs the financial crisis, which has caused more than $1 trillion in credit-related losses, is hurting corporate earnings. With banks tightening lending, bankruptcies among Japan’s listed companies reached an annual postwar record last year, according to Tokyo Shoko Research Ltd.
Governments around the world are stepping up efforts to ease the crisis that the International Monetary Fund predicts will cause global growth to almost grind to a halt this year. A U.S. Treasury official said this week that Secretary Timothy Geithner will make a speech Feb. 9 and President Barack Obama will hold a news conference that will address a stimulus package.
Indonesia’s central bank this week lowered its benchmark interest rate for a third straight month. China’s government started investing a second allocation of a 4 trillion yuan ($580 billion) economic stimulus package, the official Xinhua News Agency reported.
China’s State Council, or Cabinet, also this week said that components and raw materials that “really needed to be imported” will be exempted from import duties.
Baltic Dry
BHP, which gets about 20 percent of its revenue in China, climbed 5.7 percent to A$32.23 on speculation sales to Asia’s second-largest economy will revive. China Mobile, the world’s No. 1 wireless-phone company by users, gained 7.7 percent in Hong Kong to HK$75.90.
Kawasaki Kisen Kaisha, Japan’s No. 3 shipping line, soared 20 percent in the week to 401 yen. Mitsui O.S.K. Lines Ltd., operator of Japan’s largest fleet of iron-ore ships, jumped 19 percent to 629 yen. STX Pan Ocean Co., South Korea’s biggest bulk carrier, surged 17 percent to 11,900 won.
The Baltic Dry Index of prices for shipping commodities soared 15 percent on Feb. 4, the most since at least 1985. The measure climbed in the week amid speculation iron-ore shipments to China will increase.
Mitsubishi UFJ slumped 5.9 percent to 480 yen. The company cut its full-year profit forecast by 77 percent on rising bad loans and soured stock holdings. Japanese banks and insurers accounted for 57 percent of the $31.1 billion of credit-related losses declared by Asian financial companies, data compiled by Bloomberg show.
Hitachi, Toyota
Mizuho lost 0.4 percent to 226 yen. The company turned to a 145.1 billion yen loss in the three months ended Dec. 31 from a 66 billion yen profit a year earlier.
Hitachi slumped 6.5 percent to 275 yen after forecasting a record 700 billion yen ($7.8 billion) loss in the year ending March 31 amid slumping demand.
Toyota, which also lost its top rating from Moody’s Investors Service in the week, ended the week 5.6 percent higher at 3,090 yen. The company said its operating loss in the year ending March may total 450 billion yen ($4.95 billion) compared with company’s previous estimate of a 150 billion yen shortfall.
BHP Billiton Ltd. and Kawasaki Kisen Kaisha Ltd. led gains among mining and shipping companies after China cut some tariffs on raw material and component imports. Mitsubishi UFJ Financial Group Inc. led banks lower as rival Mizuho, Japan’s second- largest lender, cut its earnings target. Hitachi, which makes electrical equipment, slumped 6.5 percent after forecasting the biggest loss by an Asian electronics maker.
“Fiscal and monetary stimulus policies have helped improve sentiment,” said Binay Chandgothia, who oversees about $1.5 billion as chief investment officer at Principal Asset Management Co. in Hong Kong. “These measures will benefit the economy although there will be more earnings downgrades.”
The MSCI Asia Pacific Index rose 0.4 percent to 83.42 in the past five days, adding to the previous week’s 3.5 percent increase. The gauge is down 6.9 percent in 2009 amid mounting signs the global recession has hurt corporate profits.
Toyota Motor Corp., the world’s largest automaker, yesterday widened its loss prediction on slowing demand in the U.S. and in Japan. Mitsubishi UFJ cut its full-year profit forecast after the stock market closed yesterday.
The Nikkei 225 Stock Average added 1 percent last week, while Hong Kong’s Hang Seng index climbed 2.8 percent. China’s Shanghai Composite Index surged 9.6 percent.
Government Action
Stocks have fallen this year amid mounting signs the financial crisis, which has caused more than $1 trillion in credit-related losses, is hurting corporate earnings. With banks tightening lending, bankruptcies among Japan’s listed companies reached an annual postwar record last year, according to Tokyo Shoko Research Ltd.
Governments around the world are stepping up efforts to ease the crisis that the International Monetary Fund predicts will cause global growth to almost grind to a halt this year. A U.S. Treasury official said this week that Secretary Timothy Geithner will make a speech Feb. 9 and President Barack Obama will hold a news conference that will address a stimulus package.
Indonesia’s central bank this week lowered its benchmark interest rate for a third straight month. China’s government started investing a second allocation of a 4 trillion yuan ($580 billion) economic stimulus package, the official Xinhua News Agency reported.
China’s State Council, or Cabinet, also this week said that components and raw materials that “really needed to be imported” will be exempted from import duties.
Baltic Dry
BHP, which gets about 20 percent of its revenue in China, climbed 5.7 percent to A$32.23 on speculation sales to Asia’s second-largest economy will revive. China Mobile, the world’s No. 1 wireless-phone company by users, gained 7.7 percent in Hong Kong to HK$75.90.
Kawasaki Kisen Kaisha, Japan’s No. 3 shipping line, soared 20 percent in the week to 401 yen. Mitsui O.S.K. Lines Ltd., operator of Japan’s largest fleet of iron-ore ships, jumped 19 percent to 629 yen. STX Pan Ocean Co., South Korea’s biggest bulk carrier, surged 17 percent to 11,900 won.
The Baltic Dry Index of prices for shipping commodities soared 15 percent on Feb. 4, the most since at least 1985. The measure climbed in the week amid speculation iron-ore shipments to China will increase.
Mitsubishi UFJ slumped 5.9 percent to 480 yen. The company cut its full-year profit forecast by 77 percent on rising bad loans and soured stock holdings. Japanese banks and insurers accounted for 57 percent of the $31.1 billion of credit-related losses declared by Asian financial companies, data compiled by Bloomberg show.
Hitachi, Toyota
Mizuho lost 0.4 percent to 226 yen. The company turned to a 145.1 billion yen loss in the three months ended Dec. 31 from a 66 billion yen profit a year earlier.
Hitachi slumped 6.5 percent to 275 yen after forecasting a record 700 billion yen ($7.8 billion) loss in the year ending March 31 amid slumping demand.
Toyota, which also lost its top rating from Moody’s Investors Service in the week, ended the week 5.6 percent higher at 3,090 yen. The company said its operating loss in the year ending March may total 450 billion yen ($4.95 billion) compared with company’s previous estimate of a 150 billion yen shortfall.
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